My dictionary for economic development practitioners

At any point in time I am coaching several development experts and learners around the world. I have a short list of words that when I see them in any document I see red flags. However, there are also several words that when I see them I know we are on the right track.

I share my list with you. Some refer to this as Shawn’s Dictionary for Economic Development.

Synergy NOT compromise. Synergy you focus on using the strengths of different ideas, people, organisations.

Collaboration NOT cooperation through control. Get organisations to work together yet independent. Do not try everyone to sing from the same hymn sheet. Rather allow for some jazz.

Balance NOT single minded or focus. Balance allows you to work with contradiction, conflict and seemingly opposing ideas.

Catalytic NOT incidence or isolated. I know that focus is good in an office environment. But in development focus on a specific incident can easily ignore the bigger system.

Stimulate NOT achieve. Try to find ways of getting the people to work better. Energize the system, don’t just fix the problem.

Identify patterns NOT problems. The patterns tell you about the system, the problem is a symptom.

Explore NOT prescribe. Get the people in the system to better understand what is going on.

Crowd in NOT filter out. By excluding elements in the system by creating artificial filters (like gender, wealth or social status) you weaken the system.

People and relationships NOT products and technology.  This one I have to frequently remind myself about. In the end it is about the process that we use to get people to work and thing together, not about the technology or products. The latter is always temporary.

Now I know that there may be certain contexts where my dictionary might not work, but that is why a red flag goes up when I see these “wrong” words. When I see one of the wrong words I must immediately ask some deeper questions.

Which words do you red flag?

Lets build a list and have a debate!

Job creation for electronics contract manufacturing

I know some readers are waiting for the continuation of the series on the services sector. Apologies for the delay.

In the meantime, here is a link to a lead editorial that I wrote for the EngineerIT Journal in Southern Africa. The article is informed by my ongoing work in the electronics sector in South Africa. Advanced sectors such as electronics are often overlooked in developing countries because they don’t seem to absorb low-skilled staff.  However, these advanced sectors play a critical role in upgrading our economy, drawing out different kinds of suppliers, experts and even customers.

Perhaps our greatest asset for the advanced manufacturing sectors in South Africa is that we have some very demanding customers here and in the region. These demanding customers wants sophisticated products that solve problems that are rather unique.  For instance, the depth of mining in the region requires much more robust products that can work for long periods in tough environments. Also, the sophistication of the international crime cartels in the region place stringent demands on the police force in terms of communication technology. I can cite many other examples of how demand shapes the development of certain sectors.

New series: the role of the service sector in economic development

It is time for me to venture into one of my other favourite topics: the service sector and its role in economic development. With this I am not shifting into promoting  like DVD rentals (don’t worry), I am mainly interested in the knowledge intensive business sector (a.k.a KIBS) and how it enables economic growth and productivity enhancement [1].

Let me start my story.

From an economics perspective, the service sector did not receive much attention from the classical theorists, and it only really came to the fore in the twentieth century. If you are interested to know more about the history, then I can post something on this later.

The service sector is becoming increasingly important in the economies of developed and developing countries. This is not unique to South Africa. While some countries have recognised the importance of strategies to further stimulate the productivity and growth of the service sector, other countries have not yet recognised that the service sector is constrained by a variety of challenges that are unique to this sector. In fact, many countries hope that services will go away. This sector is already a large contributor to jobs and Gross Domestic Product worldwide (not only in OECD countries).

Services are different from goods and require different strategies for development than the primary and secondary sectors which have been traditionally given attention. Although not everybody agrees on how to classify services, it is generally agreed that services are becoming very important in economic development. In some cases manufacturing will not become more productive without more specialised services.

A challenge we face as development practitioners is that data on the service sector in developing countries is unreliable, if it exists at all. For instance, in many countries the engineering services offered by a small engineering firm are recorded under the clients industry in the national accounts. Thus engineering services used by a mine are recorded as mining financial data (thus inflating the primary sector and deflating the tertiary sector in the national accounts). The implication is that the role of the service sector could be much bigger than the formal statistics suggest.

For the manufacturing sector, the service sector, especially knowledge-intensive and business services, is being increasingly recognised as important levers for growth and development of the economy. Knowledge intensive service providers are not only carriers of specialised knowledge; they are also connectors, technology transfer agents and problem solvers.

In many cases developing countries undermine the development of knowledge intensive business services through poorly designed public sponsored business services. Often these services are too generic to really stimulate the growth or increased productivity of the manufacturing sector.

The service sector is also more prone to market failures for many reasons. One of the reasons why poorly developed public services harm the development of knowledge intensive business services is that it is very difficult to compare and value different service offerings (not only between private providers, but also between public and private providers).

Developing countries face the additional challenge that the producer service sector tends to favour countries with higher skill levels or human capital, and shuns countries with large pools of unskilled labour. Due to the close relationship between the service sector and the manufacturing sector, low sophistication of the service sector will also restrain the growth and development of the manufacturing sector. Services often accompany goods in global trade, and service firms are affected by this wherever they are. Thus both the service sector and the manufacturing sector must be upgraded at the same time to overcome the low equilibrium that exists.

The next few posts will delve a little deeper into the service sector

[1] For those that don’t know, my PhD thesis was about market failures in knowledge intensive business services.

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